Retailers who saw seasonally adjusted sales decrease in June included building and garden supply stores, where sales fell to $25,772 million from $26,346 million in May, bars and restaurants, where June’s sales of $45,251 million were 1.3% below May’s level of $45,821 million and their worst one month drop since February 2008, department stores, where June’s adjusted sales of $14,492 million were 1.0% less than May sales of $14,631 million, and a catch all category of miscellaneous store retailers, who saw seasonally adjusted sales fall from $10,668 million to $10,402 in June. Smaller sales declines of 0.1% were also recorded for food & beverage stores, where sales fell from $53,765 million in May to $53,706 in June, and electronic and appliance stores, where seasonally adjusted June sales of $8,311 million were slightly lower than May sales of $8,319 million..

Below we’re including two FRED graphs which show the month over month change in millions of dollars in each of the major retail sales groupings since the beginning of 2012; you can click on either for a larger view. The first FRED graph shows the seasonally adjusted monthly change for motor vehicle & parts dealers in blue, the change in sales for food & beverage stores in red, the change in gasoline station sales in orange, the sales change at general merchandise stores in green, the non-store, or online sales change in teal blue and the change in monthly sales at bars and restaurants in grey, in that order for each month. It’s pretty obvious that gasoline sales, influenced by price swings, are the most volatile element here. In our second FRED graph below, which you’ll note on the left has a smaller scale than the first, has the seasonally adjusted monthly change in millions of dollars at building & garden supply retailers in blue, at electronics and appliance stores in red, the sales change at furniture stores in green, clothing stores sales change in orange, drug stores change in teal blue, and the change in sales at stores specializing in sporting goods, hobbies, books or music in grey, again in that order for each month. Note that none of these seasonally adjusted sales changes are adjusted for changes in prices…

Food prices, which account for just over 14% of the CPI, increased at a seasonally adjusted 0.2% rate in June, although the unadjusted food index was barely changed, moving up from 236.526 in May to 236.792 in June. Prices for food away from home rose 0.2%, led by a 1.6% increase in prices for food at work and at schools, while prices for food at home also increased by 0.2%, with cereals and bakery goods and meat, poultry and fish both up 0.4%, while dairy products and fruits and vegetables just saw price increases of 0.1%. The food index saw a 1.4% increase over the year ending June, with prices for food at home up 0.9% and prices for food away from home up 2.2%, with prices for food at work and schools again showing the greatest annual increase at 5.3%, while full service meals were up 2.3% and fast food prices were only up 1.8%.. Major year over year changes in prices of food at home include an 8.4% increase in bacon prices, a 10.2% increase in fresh whole chicken, a 6.9% increase in egg prices, a 6.8% increase in prices for donuts and sweetrolls, and a 6.7% increase in apple prices, while prices for coffee fell 5.4%, prices for dried beans and peas fell 5.4%, prices for potatoes fell 3.7% and sugar prices fell 6.0%…

The price index for all items except food and energy, otherwise known as the Core CPI, increased 0.2% in June, the same as in May, and is now up 1.64% year over year, compared to last month’s 1.68%; shelter, the major component of the CPI at 31.6% of the total index, was up 0.2% in June as both rent and homeowner’s equivalent rent both rose by that same amount; year over year, the cost of shelter is up 2.3%, with rent up the same and owner’s equivalent rent up 2.2%. The price of new vehicles was up 0.3% in June and 1.2% for the year, while used cars and trucks saw prices decline 0.4% for the month and 2.3% since last June. Other factors contributing to the increase in the Core CPI include the cost of medical care, with medical commodities up 0.5% and medical services up 0.4%, apparel, which saw prices rise 0.9%, household services, which were up 0.5%, and furniture and appliances, which both saw price increases of 0.2%.. Meanwhile, the index for transportation services fell 0.1% as vehicle rentals fell 2.0% and airline fares fell 1.7%, the recreation index slipped 0.1% as prices for video and audio products were down 0.8%, and the price index for education and communication was up less than 0.1% as a 0.5% increase in tuition was partially offset by a 0.2% decline in prices for information technology commodities..

Our FRED graph above shows the change in the CPI-U since 2000 in black, and the track of the monthly changes in each of several major components of the CPI since January 2000, with each index reset to 2000 = 100 for an apples to apples comparison (some composite indexes are based on 1997, others on 1982). In blue, we have the track of the change in the price index for food and beverages, which doesn’t seem to be as volatile as alleged by those who’d remove it from core measures. In red, we have the change in the price index for housing, which at 41% of the CPI also doesn’t reflect the volatility we’ve seen home prices, but rather the more stable homeowners equivalent rent; note this index also includes housing related energy. In violet, we have the index for apparel, which has been the only index to show a net price decline over the decade. The transportation index, in brown, shows the impact of volatile gas prices on the cost of transportation, while the index for medical care in orange has obviously risen the most over the period. In addition, education and communication prices are tracked in dark green, and the track of the recreation index is shown in light green.

Industrial Production

The other key release this week was from the Fed on Industrial Production and Capacity Utilization for June, which showed that the seasonally adjusted industrial production index, which is benchmarked to 2007 = 100, rose from 98.7 in May to 99.1 in June, which is indicated to be a 0.3% increase. Of the component indexes, the index for manufacturing rose from 95.5 to 95.7, also indicated as a 0.3% increase, while the mining index rose 0.8% from 116.9 to 117.8 and the utility index slipped 0.1% from 99.3 to 99.2. Recall that mining in this context includes oil and gas production, and that the seasonally adjusted utility index is heavily influenced by unseasonable weather, which boosted the March reading to 103.8 and has resulted in negative comparisons since, such that the overall industrial production index just now regained the 99.1 reading first reached in March.. Nonetheless, the industrial production index is now 2.0% ahead of it’s year ago reading, as the manufacturing index increased 1.8% and the mining index increase 4.4% since last June…

However, for manufacturing, which is over 75% of industrial production, the quarter over quarter comparisons do not bode well for its contribution to 2nd quarter GDP; the manufacturing index slipped at an annual rate of 0.2% in the quarter just completed, after having increased at a 5.1% rate in the 1st quarter and 2.4% in the 4th quarter last year. Output of durable goods was up 1.5% in the 2nd quarter after being up 6.5% in the first, with a 9.7% annualized gain in the output of computer and electronic products and a 7.3% increase in motor vehicles and parts, offset by a 7.2% annualized decrease in output of primary metals and a 3.2% decrease in production of electrical machinery and appliances. Non-durable manufacturing, on the other hand, decreased at a 1.5% annual rate in the 2nd quarter, after showing a 4.5% annualized gain in the 1st, led by a decline of 8.4% in output of textile and product mills, a 7.1% decrease in output of apparel and leather, and a 7.8% decline in production of petroleum and coal products, offset only by a 4.7% increase in production of plastic and rubber products.. Meanwhile, mining, which accounts for over 14% of the industrial production index, was up at a 4.6% annual rate in the recent quarter, after being down 0.7% in the first quarter, while utilities, which are less than 10% of the index, saw no gain in the 2nd quarter after being up at a 5.2% annual rate in the first three months of the year…

The index for business equipment, which accounts for 9.61% of the industrial production index, advanced 0.5% to 102.6 after falling 0.1% in May and 0.2% in April; production of transit equipment was up 0.5%, while output of IT equipment fell 1.0% and other industrial equipment rose 1.1%. In addition, production of defense and space equipment was up 0.1% in June, its first monthly increase this year, while construction supplies and business supplies, two indexes with no subcomponents, also both showed nominal 0.1% month over month increases. Production of intermediate materials to be processed further, which accounts for 46.54% of industrial output, increased by 0.2% in June, after gaining 0.2% in May and retreating by the same amount in April. Output of durable materials increased by 0.4% as output of equipment parts led the increase with a gain of 0.8%. Output of nondurable materials, on the other hand, slipped 0.1%, with a 1.2% decrease in paper output and a 0.3% decrease in output of chemicals more than offsetting a 2.3% increase in production of textiles..And lastly, output of energy materials to be processed further saw a 0.4% increase in June…

The Census report on June New Residential Construction indicates that June housing starts were "9.9 percent (±11.4%)* below the revised May estimate of 928,000", and that asterisk points us to a footnote which says in part that if the range contains zero, which it does, it is uncertain whether there was an increase or decrease in new home starts. Reading a bit more we see that range is describing the 90% confidence interval; in other words, what that 9.9% ± 11.4% means is that based on their slim sampling, census is 90% confident that the number of new home starts in June, if seasonally adjusted and projected over an entire year, would result in something between 730,336 and 941,920 residential units being started over a year’s time. Their estimate on single family starts has an equally wide range of likely starts; single family home starts are reported down 0.8% (±11.0%)* from the revised May estimate of 596,000; which means there’s a one in ten chance that the annual rate of single family starts in June was greater than 656,792 or less than 525,672. Similarly, the year over year range of starts, 10.4 percent (±14.9%)* above last year’s rate of 757,000, includes zero and an asterisk, meaning that with the data at hand, Census cant even be 90% confident that new home starts actually rose from a year ago…

The actual monthly estimates of new home starts by census field reps from which these seasonal adjusted annual rates were contrived were 80,400 in June, and 88,100 in May, with single family starts accounting for 59,200 of June starts and 57,800 of units started in May. Most of the reported June decline in housing starts came from the a decline in the volatile starts in buildings with 5 or more units, in which fell from 29.400 units in May to just 20,400 units in June, so it’s a fair guess that a slowdown in starts of apartment building accounted for most of the apparent pullback reflected in the headline numbers. Reported June home completions, which are also estimated at an annualized rate with a wide range of uncertainty (6.3% ±14.1%* higher than May) totaled 65,800, leaving a seasonally adjusted 624,000 homes under construction at the end of June, up from 621,000 at the end of May, suggesting it’s doubtful construction employment will be affected by this one month contraction in housing starts.

This report also includes an estimate on new building permits issued during the month, and because they sample about half the permit issuing places in the US for this metric, the margin of error on new permits is small enough that we can get an real idea of the actual monthly activity. In June, new housing units authorized by permits were estimated to be at a seasonally adjusted annual rate of 911,000 (±1.0%), which was 7.5% below the May rate of 985,000 and 16.1% (±1.7%) above the estimate of 785,000 from last June. 624,000 (±1.2%) of those new permits were for single family units, statistically unchanged from May’s 620,000 single family permits, and 261,000 units were authorized in apartment buildings of 5 or more units…

Above, our FRED graph for this report shows the census monthly estimate of total new home starts at an annual rate in dark blue going back to the beginning of 2006, while the portion of those that were estimated to be single family starts is shown in light blue. We can see that the seasonally adjusted starts are lower over the past three months than they were during the 1st quarter of the year, suggesting that unless starts pick up in coming months, new investment in residential structures may suffer in subsequent GDP comparisons, as it takes an average of 6 months for a single family home to be completed, and an average of 11 months from start to finish for all types of multi-unit building. Units of seasonally adjusted new housing construction authorized by permits is shown in red, and though they were at a post bubble high in April, we should have seen more of them turn into higher starts by now, as the average time from permit to start is less than a month for single family homes and less than two months for multi unit residential structures. This suggests that builders may be moving cautiously in the face of higher interest rates. Lastly, the green track on our FRED graph is total residential units completed per month, at an annualized rate. As long as the seasonally adjusted rate of starts remains above the rate of completions, construction employment should remain stable, if not increase, on a seasonally adjusted basis…

About Lambert Strether

Lambert Strether has been blogging, managing online communities, and doing system administration 24/7 since 2003, in Drupal and WordPress. Besides political economy and the political scene, he blogs about rhetoric, software engineering, permaculture, history, literature, local politics, international travel, food, and fixing stuff around the house. The nom de plume “Lambert Strether” comes from Henry James’s The Ambassadors: “Live all you can. It’s a mistake not to.” You can follow him on Twitter at @lambertstrether. http://www.correntewire.com

Too bad the housing graph is from 2006, not 1986 — housing lasts much longer than any other consumer item, so the longer term trend is more relevant. Similarly, my own theory of the Fin Crisis is overbuilding from 2002/3 or so.

Overinvestment is too little studied, but usually results in a big local fall. If big and wide enough, a financial crisis due to overinvestment / mal-investment. I guess that only in the next few years will the US be building at a “long term” stable rate.

Tom, i used a short time frame on that chart so one could see the recent movements, but the chart is linked to the same chart at the St Louis Fed, where you can change the “Observation Date Range” to view the data over any span you want:

there are 4 lines on that chart, but if you type in the date you want on one, then click “Copy to All Lines”, you’ll change the date range for all 4, and then clicking “Redraw Graph” will give you the picture…

I don’t know how they come up with those numbers, especially for supermarkt items. I hardly ever see any prices go down.

I am seeing more sales in an effort to get us to the stores. But I notice that there are fewer people in the stores. Even Dollar General, where the people who couldn’t afford Walmart went, is empty. And in Walmart, I find it difficult to locate workers for assistance. And when I go to check out, most of the registers are closed.

All these numbers are fabrications built on fantasy and massaged by statistical finagling. I track actual cash outlays day by day and have seen increases at 12-15% per year since 2010, despite the fact that my life hasn’t changed one bit.

Figures don’t lie; liars figure. Taking any of these numbers seriously simply gives added comfort to those selling the trickle down Growth Fairy Scenario. Its purpose is to keep the rats turning the treadmill to nowhere, while the looters and speculators continue to cash in.

Great time to get into deep debt bondage. Feed the machine, they are screaming for it, double down on the psychiatric medication, break the piggy bank, get relatives to chip in, follow the herd over the cliff.